Artificial intelligence is rapidly transforming the consulting industry, and the Big Four firms – Deloitte, EY, KPMG, and PwC – are at the forefront of this change. These firms are investing heavily in AI to develop new services, improve the efficiency of their operations, and gain a competitive edge.
AI’s Journey to Big Four Consulting Firms
I think it is important to firstly give you a little introduction of how AI was used before by the Big Four. AI’s journey to the Big Four consulting firms has been a gradual one, marked by both skepticism and cautious adoption. The initial hesitation stemmed from concerns about the potential for AI to replace human consultants, the lack of proven applications in the consulting industry, and the ethical implications of using AI to make decisions.
However, as AI technology matured and its benefits became more apparent, the Big Four firms began to embrace its potential. In 2016, PwC launched its first AI innovation center, and the other Big Four firms soon followed suit. Since then, AI has become an integral part of the Big Four’s operations, with applications ranging from data analysis and automation to client relationship management and risk assessment.
EY’s Pioneering Use of AI for Audit Fraud Detection
EY has been at the forefront of using AI for audit fraud detection recently.
When Big Four accounting firm EY tried out an artificial intelligence system Helix GLAD, it was able to detect fraudulent journal entries in a dataset of real-world financial data. According to Kath Barrow, EY’s UK and Ireland assurance managing partner, the new system detected suspicious activity at two of the first 10 companies checked. The clients subsequently confirmed that both cases had been frauds.
This early success illustrates why some in the industry believe AI has great potential to improve audit quality and reduce workloads. The ability of AI powered systems to ingest and analyse vast quantities of data could, they hope, provide a powerful new tool for alerting auditors to signs of wrongdoing and other problems.
Yet many auditors disagree sharply about how far they can rely on a technology that has not yet been widely tested and is often poorly understood. Some audit firms are sceptical that AI systems can be fed enough high quality information to detect the multiple different potential forms of fraud reliably. There are also some concerns about data privacy, if auditors are using confidential client information to develop AI.
- “Frauds are . . . unique and each is perpetrated in a slightly different way,” Stephens said. “By nature they are designed to circumvent safeguards through novel uses of technology or exploiting new weaknesses, and AI doesn’t play well there right now.” – Simon Stephens, AI lead for audit and assurance at the UK business of Deloitte, another of the Big Four audit firms, pointed out that frauds were relatively rare and tended to differ from each other. That would mean there were not necessarily tell-tale patterns for AI systems to pick up.
- KPMG UK, another Big Four auditor, echoed the concerns of Stephens at Deloitte. “Fraud by its nature is unpredictable and therefore using known fraud cases to train machine learning models is challenging,” KPMG said.
- “AI can automate some of the more mundane, repeatable tasks and allows our auditors to focus on the areas of greatest risk,” – Stephens acknowledged that the technology had its uses in auditing. But he saw a far more limited role for it. As Deloitte currently restricts use of AI to less complex tasks, providing clear instructions on what kinds of anomalies to look for in company accounts.
So Why Only EY Uses AI for Finding Audit Frauds
There are a few reasons why EY is the only Big Four firm that has publicly announced its use of AI for audit fraud detection. First, EY is a leader in the audit and assurance space, and it has a strong track record of innovation. This gives EY the credibility and expertise to develop and implement AI-powered audit tools.
Second, EY has made a significant investment in AI, both in terms of financial resources and human capital. This investment has allowed EY to develop Helix GLAD and other AI-powered audit tools that are at the forefront of the industry.
Third, EY has a strong culture of innovation, and it is willing to take risks on new technologies. This culture has fostered an environment where EY’s auditors are comfortable using AI to detect fraud.
As AI technology continues to mature, it is likely that other Big Four firms will adopt AI-powered audit tools. However, EY is currently the leader in this area, and it is well-positioned to maintain its lead in the years to come.
What is to expect (my opinion)
AI is transforming the whole world right now, and of course the consulting industry will not be an exception, and the Big Four firms will be at the forefront of this change. Even though now almost all consulting firms (except for EY) are very sceptical about the AI usage, I think AI implementation in consulting industry will be for the better, as it will automize work, for sure, and also find some problems/issues that we as people are not able to indicate, as we all can make mistakes.
Of course as were said below there many negative points too, but looking at the consulting industry, what is the one of the most important things after the result itself? – Right, audit fraud detection and this is exactly what AI can help us with. What I am trying to say is that even though there some risks that should be considered, when AI can help so much we should not avoid it, but improve and implement it, which is exactly what EY did. I think EY made the first step, and all the other consulting companies will soon follow
What is your opinion?
Sources(reference):
- https://www.ft.com/content/b18961f1-c65c-433b-8dd4-05196fa0e40a ( post about EY usage of AI for auditing frauds )
- https://www.forbes.com/sites/adelynzhou/2017/11/14/ey-deloitte-and-pwc-embrace-artificial-intelligence-for-tax-and-accounting/?sh=3948df8b3498 ( from Forbes about all Big Four usage of AI )
- https://www.ey.com/en_gl/audit/technology/helix ( more about Helix GLAD technology from EY )
- https://www.ey.com/en_gl/news/2023/09/ey-announces-launch-of-artificial-intelligence-platform-ey-ai-following-us-1-4b-investment#:~:text=EY.ai leverages leading-edge,by a robust AI ecosystem. ( new AI technology launched recently by EY)
- https://web.archive.org/web/20210815025449id_/https://aisel.aisnet.org/cgi/viewcontent.cgi?article=1007&context=amcis2020 ( impact of AI on auditing )
AI generators used:
- Google Bard (key words: AI, Big Four, consulting, auditing frauds, EY)